Industry Insiders Estimate EpiPen Costs No More Than $30

Mylan says middlemen and suppliers have forced them to jack-up the prices on EpiPens by hundreds of dollars, but two industry insiders say the company pays no more than $30 per device.

Meanwhile, some patients are forced to pay a little over $600 out of pocket for a two-pack of the lifesaving medication. Mylan sparked outrage last month when it was revealed the company had hiked up costs for the drug by over 400 percent since it acquired the brand.

A third expert pegs Mylan’s cost even lower, at about $20. Kevin Deane, a partner with the PA Consulting Group, a global technology and design firm that sold a drug delivery technology company to Pfizer in 2004, told NBC News that the base components for each EpiPen, including the plastic cap, tube, and needle, might cost between $2 to $4 to purchase. Pharmacists contacted by NBC estimate that the epinephrine inside costs less than $1.

Additionally, based on industry norms, Mylan would have to pay a licensing fee to companies involved in research and development of the device. This amount might generally multiply the price that Mylan pays Pfizer’s wholly owned subsidiary Meridian Medical Technologies, which manufactures the epinephrine auto-injector between two and five times, said Deane.

“What they’ve been doing is they’ve been making little updates to it, refinements to make it work better,” said Deane. “But it essentially is the same core technology that was there for many years,” he said.

In a call with NBC News, Pfizer spokeswoman Rachel Hooper declined to comment on or confirm the pricing arrangement, citing confidential contract agreements, a position echoed by Mylan.

“We do not comment on the terms of third-party contracts,” said Mylan company spokeswoman Julie Knell.

In a recent CNBC interview, embattled Mylan CEO Heather Bresch tried to shift blame for EpiPen’s spiraling costs onto the “four to five hands” that touch the product between Mylan and the consumer.

But under standard industry practices, besides the portion to your insurer, most of those middlemen only take a single digit percentage.

And while the supply chain particulars or even the premium prices are not themselves unusual in the context of the U.S. healthcare system, Adam Fein, president of Pembroke Consulting, a healthcare firm that advises drug makers on commercial issues, said Mylan did do two things that were different.

Mylan ended up with a monopoly because of the failure of the government and competition to put viable alternatives on the market, he said, and they “aggressively increased prices last year.”

In 2015 EpiPen’s price rose 30 percent — more than double the average branded drug price increase of 12.4 percent, according to a recent IMS Institute report and an analysis by Connecture, a health insurance technology and data analytics company.

This profit-taking led to impressive margins for Mylan, which posted $1 billion in sales for the past two years, following years of awareness campaigns and legislation that increased the number of patients being prescribed the device and schools stocking it.

A model provided to NBC News by Pembroke Consulting broke down the gross profit to each of those intermediaries, based on industry norms and using the costs stated by Bresch. For illustration purposes, it assumes a list price of $600 per two-pack.

Bresch stated that Mylan then gets $274 in the transaction. From there, it must pay for “manufacturing, distribution, regulatory, patient assistance program, My EpiPen Savings program, disease awareness initiatives and product donations,” according to a slide displayed during Bresch’s CNBC interview and distributed in a press release afterward.

“Mylan works with pharmacy benefit managers (PBMs) and insurers to provide coverage and access to our products; however, those entities, along with the payors, make the decision regarding choice and pricing of products,” said Mylan’s Knell. “As aligned with standard industry practice, we pay rebates to PBMs and insurers to allow for patient access to EpiPen at the lowest possible cost.”

Mylan didn’t respond to an NBC News request to itemize those costs, but a Mylan spokesperson told NBC that “all of those costs would clearly make the $274 number significantly lower.”

“Mylan in a very inartful way tried to deflect blame by pointing to the system,” said Adam Fein, president of Pembroke Consulting. “Whether you like it or not, it’s the way the world works.”

Competition blocked

Pharmaceutical companies will sometimes pay PBMs steeper discounts in order to shut out their competition, said Fein. And, in the past, two of the biggest PBM companies have excluded EpiPen competitors from coverage: In 2014, Express Scriptsexcluded AuviQ (PDF), and in 2015Caremark didn’t cover Adrenaclick (PDF). This meant that if your insurance company was their customer, you would not be able to get the EpiPen alternative without paying full retail price.

“In 2014 and 2015, we leveraged the competition between EpiPen and Auvi-Q to earn additional discounts for our clients,” said Express Scripts spokesman Brian Henry, saving their customers $750 million and $1 billion in those two years, he said. Caremark did not respond to a request for comment.

In response to the upset, Mylan is giving insured patients a $300 coupon, is launching its own cheaper generic EpiPen version, and increased the number of patients eligible for financial assistance.

Even before the crisis emerged, Mylan said it was taking steps to increase EpiPen access and affordability. Mylan said that it has given away more than 700,000 free EpiPens to schools since 2012. When its coupon program for insured customers was $100, it said nearly 80 percent of those customers were getting their auto-injectors for $0.

“We have been a long-term, committed partner to the allergy community and are taking immediate action to help ensure that everyone who needs an EpiPen Auto-Injector gets one,” said Bresch in a statement. “We recognize the significant burden on patients from continued, rising insurance premiums and being forced increasingly to pay the full list price for medicines at the pharmacy counter.”

On Tuesday that schools program became the source of its own new controversy, with New York State state Attorney General Eric Schneiderman launching a probe into whether the company had violated antitrust laws by requiring participating schools to agree to not buy any products from Mylan competitors for 12 months. Senators Blumenthal and Klobuchar also called for a new FTC investigation into the same.

“There are no purchase requirements for participation in the program, nor have there ever been to receive free EpiPen Auto-Injectors,” Mylan spokeswoman Nina Devlin wrote NBC News in a statement. “Previously, schools who wished to purchase EpiPen Auto-Injectors beyond those they were eligible to receive free under the program could elect to do so at a certain discount level with a limited purchase restriction, but such restriction no longer remains.”

Summary: Mylan says middlemen and suppliers have forced them to jack-up the prices on EpiPens by hundreds of dollars, but two industry insiders say the company pays no more than $30 per device.
Meanwhile, some patients are forced to pay a little over $600 out of pocket for a two-pack of the lifesaving medication. Mylan sparked outrage last month when it was revealed the company had hiked up costs for the drug by over 400 percent since it acquired the brand.

A third expert pegs Mylan's cost even lower, at about $20. Kevin Deane, a partner with the PA Consulting Group, a global technology and design firm that sold a drug delivery technology company to Pfizer in 2004, told NBC News that the base components for each EpiPen, including the plastic cap, tube, and needle, might cost between $2 to $4 to purchase. Pharmacists contacted by NBC estimate that the epinephrine inside costs less than $1.

Additionally, based on industry norms, Mylan would have to pay a licensing fee to companies involved in research and development of the device. This amount might generally multiply the price that Mylan pays Pfizer's wholly owned subsidiary Meridian Medical Technologies, which manufactures the epinephrine auto-injector between two and five times, said Deane.

Consider the life of a chef on the road. Even when they’re not doing “research” for an upcoming project—trips that are essentially designed for overeating and drinking—they’re still likely seeking the best of what got them into the industry in the first place: damn good food.

The proliferation of low-cost airlines flying out of the U.S. means that it’s now possible to hop to Europe for as low as half the price charged by major carriers, the New York Times writes. But there’s always a trade-off — and it pays to comparison-shop, according to the publication.

Featured Contributors

Chasing snake oil and fad gurus is harmless until your journey of personal discovery becomes a platform for prescribing therapies to complete strangers. Any reasonably diligent venture capital partner should be weighing the risks.

Shkreli — who famously insulted members of Congress earlier this year but refused to testify officially over his own decision to increase the price of a life-saving pill — is now hopping at the chance to defend generic drug manufacturer Mylan.
He may even have opened the door to testify before the House Committee on Oversight and Government Reform, where he previously cited his Fifth Amendment's right to avoid incriminating himself.
"Any chance i can come through this time and actually testify?" he tweeted Thursday in a post directed at the committee's Democrats.
All of this now paves an unlikely new friendship between Shkreli and Mylan CEO Heather Bresch.
Heather Bresch created about $15 billion in value for Mylan in the seven years since she stepped up as president of the company. A big part of that value add came from her talent for repackaging off-the-shelf drugs into bona fide blockbusters.

Donald Trump is talking about Hillary Clinton’s health, as are two doctors who havenever evaluated Clinton. They have apparently diagnosed her with all kinds of ailments using the long disproven Fox-Drudge equation.
This attention on Clinton has renewed some interest in the letter Donald Trump released last year from his personal physician.

Even as doctors enter a medical field with more paying patients under the Affordable Care Act and unprecedented numbers of job opportunities, 25 percent of “newly trained physicians” would still choose another field if they could, according to a new analysis.